It’s becoming harder and harder to convince families and corporate clients that international diversification is good for them.

Back in 2013

It’s completely understandable. US stocks have done far better over the last 6 years. I wrote about this back in 2013 when I first sensed investor frustration that their professionally constructed portfolios were under-performing the S&P 500 (which is almost all Large US companies).

This downturn in China could conceivably be a start of a major depression in that country.

I don’t expect this to be the case, but it is a remote possibility.

Does this mean the way the Chinese have been managing their economic growth has been a disaster?

Let’s not start calling “failure” so soon. A lot of the criticism I see of China is hypocritical. The US economy went through incredible gyrations during the “American Century,” including our Great Depression. ...

It sounds like a glaringly obvious statement, and yet the financial media is always so surprised when one country or region outperforms another.

Right now the problems and poor performance continues to mount in Asian emerging markets. Indonesia just took a big hit, China is having trouble, Indian currency just dropped, and surrounding countries are slumping.

Depending on what index or fund you were following, emerging markets were up huge yesterday, between 3-5%. But Emerging markets are still lagging heavily this year. As of this writing, the MSCI Emerging Markets Index is down -9.20%, while the S&P 500 (which is all US stocks) is up 18.79%. Here is a chart

A global portfolio gives a family the best chance of having positive return and beating inflation over the long term.

It sounds like an obvious, banal statement, but there is more to it when you look at the components of a global portfolio over the decades. Financial markets, especially stock markets, will do wild and unexpected things. Japanese stocks and their amazingly bad run since 1990 (over 22 years ago) helps illustrate what I’m talking about.

This is certainly true for the investment markets. I often use history as a guide, but I also keep in mind there will never be a perfect repeat of the past.

Like with wars

When I hear market analysis, I am often reminded of historical commentary on conflicts and wars. No two military conflicts have ever been exactly the same, but there is also a lot that can be learned ...